Steve August 15, 2020
how-the-pharma-lobby-is-co-opting-state-efforts-to-cap-the-price-of-insulin

This article was produced by FairWarning, a nonprofit news organization based in Southern California that focuses on public health, consumer, labor and environmental issues.

Tennessee state Rep. Jason Hodges wanted to do something about the soaring cost of insulin. He learned that in the United States, the average list price for insulin tripled from 2002 to 2013 and then doubled from 2012 to 2016, forcing some diabetics to spend as much as $1,200 a month. So he wrote a bill to forbid any pharmacy in Tennessee from charging more than $100 for a 30-day insulin supply, thinking that would force drug companies to lower their prices.

As Hodges, a Democrat, prepared in March to file his bill, he was approached by a lobbyist for Eli Lilly & Co., one of the three multinational drug companies that make insulin for U.S. patients. The lobbyist handed him an amendment, Hodges told FairWarning, and said one of his co-sponsors had already signed off on the changes.

“I’m the sponsor of the dang bill, I haven’t agreed to anything,” Hodges remembers responding. Eli Lilly’s proposal also would have capped the monthly cost of insulin at $100, but only for diabetics with health insurance. It offered nothing for the uninsured. Knowing that many of the people struggling to afford insulin in Tennessee are uninsured, Hodges rejected the changes. He says the lobbyist, Estie Harris, warned that Eli Lilly would fight the bill unless he reconsidered. Harris did not respond to messages from FairWarning.

Insulin, which was invented 100 years ago and costs less than $10 a vial to produce, according to one study, has become a symbol of the federal government’s failure to control the cost of prescription drugs. As diabetes became an epidemic in the United States, researchers found that manufacturers Eli Lilly, Sanofi and Novo Nordisk drastically increased the list price of their medications; Eli Lilly’s popular Humalog injections are now listed at $275 a vial for American consumers. In Canada, that same vial goes for $32.

The three drug manufacturers have justified the price hikes by saying that their profits from insulin have not increased after accounting for inflation, the cost of research and negotiations with health insurers and pharmacists.

Spurred by stories that diabetics are spending thousands of dollars a year on insulin, or even dying trying to ration it, lawmakers in at least 36 states are trying to tackle the issue, according to a FairWarning review of state bills introduced in the past two years. But the lawmakers are finding that the drug industry is working full-time to weaken or kill insulin price caps.

According to interviews with lawmakers in nine states, often the only way to pass an insulin price cap is to write it in a way that pushes the cost on to insurers. Lawmakers in two states, Tennessee and Minnesota, said their proposals faced pushback from pharmaceutical industry lobbyists when they tried to reduce the price for all patients, not just those with insurance. Lawmakers in several other states said that the pharmaceutical lobbyists were neutral or even helpful when they proposed controlling insulin costs through insurance copays.

Some lawmakers said they decided on copay caps because they knew from having gone against the pharmaceutical lobby in the past that otherwise their bills would fail. A lawmaker in West Virginia said that a report commissioned by Eli Lilly stating that copay caps were the best way to reduce insulin costs helped sell her on the idea.

Last year, West Virginia lawmakers organized a bus trip to Canada to help constituents buy affordable insulin. In March, the state passed a $100 copay cap.Courtesy of Barbara Evans Fleischauer

Forcing insurers to share more of the cost of insulin, as the Eli Lilly lobbyist in Tennessee had allegedly proposed, would certainly help some diabetics, but may also help drug companies. Lowering copays, or the amount an insured patient spends out-of-pocket, doesn’t force drugmakers to put a lower price on life-saving drugs — or hold drugmakers responsible for their role in rising health care costs, patient advocates say.

In a statement, Eli Lilly spokesman Bradley Jacklin said the company “believes in the common goal of ensuring affordable access to insulin,” and that it’s possible to achieve this through rebates, discount programs and “increasing awareness” of government programs that subsidize insulin.

In Tennessee, Hodges secured enough votes for his bill to set a $100 price ceiling — not a copay cap — at its first reading. But in June he decided to pull the bill, after colleagues whose support he counted on told him they would no longer vote for it. “I refused to change the bill, and so at that point pharmaceutical companies were very opposed to it,” he said.

The problem with copay caps

Unlike Hodges, Oregon state Rep. Sheri Schouten, a Democrat, got buy-in from the drug industry when she wrote a bill to lower what diabetics would pay for insulin. Rather than put a cap on the price, her bill would have imposed a $75 limit on insurance copays. She expected it to pass before COVID-19 brought work in the Legislature to a halt.

If the pharmaceutical industry is “going to come after you, nothing’s going to happen,” she said in an interview. “So that’s the reason I went through the insurance route.”

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Some advocates say that copay caps don’t address the root of the problem — high insulin prices. Besides doing nothing for the uninsured, copay caps only help people with private insurance. People on federal health plans like Medicare won’t benefit because states can’t regulate prices set by federal plans.

Harry Rybolt is an example of a Type 1 diabetes patient who would be left out under a state copay cap. Rybolt, 68, a social worker in Indiana, expects that his insulin will cost him $350 a month under Medicare Part D. He started speaking out against high drug prices when his son Jeremy Crawford died at 39 from complications of the disease last year. The family realized he had likely been going without his normal insulin prescription while waiting for the health insurance at a new job to kick in.

“All he had to do was call me,” Rybolt said.

T1International, a diabetes advocacy group that has pushed state and federal lawmakers to regulate the price of insulin, says that copay caps are better than nothing, but should not be the ultimate goal. According to the group’s research, about a quarter of Type 1 diabetics in the U.S. ration their insulin to save money, and at least five people in the U.S. died from insulin rationing in 2019.

“One of the reasons that pharma is not challenging these bills is because these copay caps aren’t punishing pharma at all,” T1International advocacy manager Allison Bailey said. And because the copay caps push the price onto insurers, “I think it’s within reason to expect that at some point, it might affect the premiums of other individuals.”

Lawmakers proposing copay caps also have to contend with the health insurance lobby, which has testified against such bills and worked to weaken one that had already passed in Colorado. In May 2019, Colorado became the first state to cap insulin copays for diabetics with private insurance. “The situation had become so dire that we needed to pass something right away that would have an immediate impact on the price of insulin,” state Rep. Dylan Roberts, a Democrat and the bill’s author, said in an interview. The law was supposed to set a $100 copay limit on a diabetic’s entire monthly insulin prescription.

But after the bill was signed into law, the insurance industry convinced Colorado regulators that the cap should apply to each brand of insulin, even though some diabetics rely on multiple brands in a month. The Colorado Legislature hoped to close the loophole before COVID-19 cut the legislative session short. “I wish they would have let us know that they were going to lobby the Division of Insurance for a loophole,” Roberts said.

Nine other states — Illinois, Maine, New Hampshire, New Mexico, New York, Utah, Virginia, Washington and West Virginia — got similar copay limits signed into law. In Utah, the copay cap that passed in April will also benefit the uninsured through a state-funded program that provides a 60 percent discount.

“The manufacturers weren’t excited about it. But they said, ‘Hey, we’re a whole lot more OK with what you’re doing than what they’re doing in other states,’” Utah state Rep. Norm Thurston, a Republican, said in an interview. “And I was like, OK, that tells me maybe I need to push harder. And they said, ‘No, no, no, you’re doing fine.’”

Lobbying, then lawsuits

Facing off against industry lobbyists at legislative hearings, volunteer advocates share personal stories about the crushing costs of insulin. While both Type 1 and Type 2 diabetics rely on prescription insulin, those with Type 1, which is an auto-immune disorder, are dependent on the medication for survival and thus more vulnerable to high prices.

In numerous hearings in 2018 and 2019, Nicole Smith-Holt and James Holt told Minnesota legislators how their son Alec Smith died in 2017 at 26, trying to pay for his insulin out-of-pocket while working at a restaurant job that didn’t offer health insurance. The couple was adamant about the need to help all patients, not just those with insurance. Democrats in the state House proposed that drug companies fund discount insulin for the uninsured.

PhRMA, the leading drug industry group, argued that the industry was already taking voluntary steps to help diabetics, including supporting rebate and discount programs and advocating for insurers to limit copays.

In 2019, Novo Nordisk, which hadn’t done any lobbying in Minnesota the year before, spent $120,000, state records show. PhRMA spent $430,000 on lobbying in 2019, state records show, about double the usual amount. Disclosure statements don’t indicate how much was spent to fight the insulin bill.

Reached by telephone, a lobbyist hired by Novo Nordisk that year declined to comment. Novo Nordisk spokesman Ken Inchausti said: “Our engagement in Minnesota was to ensure stakeholders were educated on how our existing national insulin affordability programs are robust.”

Ultimately, the Alec Smith Insulin Affordability Act, signed into law in April, requires Minnesota pharmacies to provide insulin at a steep discount to the uninsured and others who qualify. The law requires drug companies to provide free insulin to pharmacists who offer the discount.

But just hours before Alec’s law was to go into effect, on July 1, PhRMA sued, claiming the law amounted to an unconstitutional taking of private property. The Minnesota law will “order pharmaceutical manufacturers to give insulin to state residents, on the state’s prescribed terms,” the suit argues, “at no charge to the recipients and without compensating the manufacturers in any way.”

The discount program is in effect while the suit is pending. “The drug manufacturers keep showing us who they really are,” said state Rep. Mike Howard, one of the sponsors.

In a statement, PhRMA told FairWarning that it supports policy changes that make “the system work better for patients,” and listed ideas that stop short of reducing the price of insulin.

The American Diabetes Association, a major advocacy group for patients with the disease, has supported copay caps, but did not endorse Alec’s law and has faced criticism for not calling out insulin manufacturers by name. Unlike the smaller T1International group, which refuses donations from the drug industry, the diabetes association lists all three insulin manufacturers as leading corporate sponsors on its website and has accepted millions of dollars in contributions from drug companies, according to a database compiled by Kaiser Health News in 2015. A spokesperson told Kaiser Health News in 2018 that the diabetes association prefers to focus on “all entities in the supply chain” rather than individual drug companies.

The American Diabetes Association has not responded to repeated interview requests from FairWarning.

PhRMA has also sued Nevada over a requirement to justify insulin price hikes.

In 2017, Gov. Brian Sandoval, a Republican, signed a strict drug transparency bill. Focusing on diabetes medication, it required drug manufacturers to explain in writing the reason for any price hike exceeding the inflation rate.

Before it went into effect, PhRMA and another trade group filed a federal lawsuit, claiming the Nevada law was unconstitutional because it forced drugmakers to disclose proprietary information. The state ultimately agreed to numerous exemptions for trade secrets to get the industry to drop the lawsuit.

The fatal consequences

Erin Weaver grew concerned last year that her son Joshua Wilkerson was rationing his insulin after she read about others who had died doing so. At 26, Wilkerson had aged off his stepfather’s health insurance and switched to his employer’s plan. But the coverage offered by the dog kennel where he worked in Leesburg, Virginia, was not as good. The cost of managing his Type 1 diabetes skyrocketed to $1,300 a month, Weaver told FairWarning, a figure that included not just the prescription medication but blood meters and other supplies to keep a close watch on his blood sugar.

“He was probably what’s termed a brittle diabetic. His blood sugar, with no rhyme or reason, it would go high or low,” Weaver said.

Josh Wilkerson died at 27 after switching to over-the-counter insulin. Courtesy of Erin Weaver

Stress would raise his blood sugar, she said, and trying to pay for medication with his $16.50-an-hour job was stressful. But last year, her son told her she no longer needed to worry. He and his fiancée, also a Type 1 diabetic, had found a solution in Walmart’s $25 insulin, which is only meant to be used by diabetics with milder forms of the disease and with guidance from their doctors.

In June 2019, while apartment-sitting by himself, Wilkerson stopped answering phone calls. He died at the age of 27 from diabetic ketoacidosis, or a spike in blood sugar that is a complication of Type 1 diabetes. The story of his death pushed Virginia lawmakers to later cap insulin copays at $50 a month.

“In our country that has so much, to die because you cannot afford medicine that is necessary for your life is absolutely ridiculous,” Weaver said.

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